Covering Employees Parents under group health insurance- 3 different cases

In the Indian scenario, only 50% of the
employers include parents of the employees while covering them under Group
Insurance. Out of these 50% employers who include parents, 25% of them collect
premium from employees and act only as a facilitator by arranging group policy.
Only 25% of employers bear the cost of the premium.

Premium payable is decided based on many
factors and most important among those is previous year claims. With people who
are aged and with the pre-existing disease it is very natural that the
frequency of claims will be high and most of the times intensity, in other
words, the amount of claim is also high. So, should the employer forget about
including parental insurance as part of employee benefits? The answer is “No”. A strategic approach towards designing the
group policy will help in bringing down premium cost and at the same time
extend the benefit of group insurance to the parents of the employee.

Following are configurations and scenarios to be considered
while designing the structure of group insurance policy to minimize the premium
cost:

•
The employer bears the cost of the premium and is not collecting any
amount from the employees

• The
employee bears the cost of premium fully or partially

• When
neither of the two above is possible

Now let’s understand the details of the above case scenarios:

Case 1: Employer bears the cost of the premium
and is not collecting any amount from the employees

Employers who are including parents of
the employees in group insurance and paying premium from their pockets shall
take the following steps while designing the policy. They must focus on
ensuring the claims are not very high in the current year so that next year the
premium will not be high.

• Exercising
sub-limits on employee cover: The employer must
work with its broker to design the policy in such a way that the employees
should take standard/benchmark benefits and not luxury benefits from the policy.
The policy must contain in-built limits with respect to diseases. It should
include most common ailment intervention like cataract surgery, piles surgery,
hernia surgery, hysterectomy, Hydrocele correction, Joint Replacements, Gall
bladder stone surgery, appendicitis surgery, etc which are not costly. Also,
insertion of a clause that only average standard cost is allowed and anything
above that will not be allowed.

Example: For daycare/ short stay
procedures, like cataract, BPH surgery, for an employee or the dependents, it
is important to consider that the treatment cost can vary significantly
depending on the facility where it is undertaken. Due to the lack of
standardization of cost across hospitals, cataract surgery in a private
hospital will cost around 10,000, however, the same procedure will cost 20,000
in a multispeciality hospital. So, in this case, only 10,000 will be allowed on
the submission of actual bills!

• Setting a lower
limit on claims: The policy must be
structured in a way where employees can claim expenses which are painful to the
pocket and not for the sake of claiming. The employer must set a minimum limit
for seeking claim say 3,500/- this way all small claims below 3,500/- will be
curbed and employees will not be visiting as inpatient just for the sake of
claiming.

• Hospitalization in
preferred hospitals: Just setting up of
minimum limit of claim is not enough. There can be a possibility that hospitals
will misrepresent and join hands with employees to fetch money. Therefore, it’s
important to include a clause that encourages employees to avail services in
preferred hospitals.

A clause stating that employees who are
availing services in preferred hospitals will get 100% claim and those who are
availing at other hospitals will be getting only partial claim to say 70% of
bill amount. It will encourage employees to avail services in preferred
hospitals and if an employee chooses other hospitals, it will reduce the claim
to 30%.

Preferred hospitals are those hospitals
that do not have the tendencies to overcharge or inflate the bills or misguide
the patients to draw money. Employer as a company can also work with different
hospitals to get a discounted rate of consultation in return for adding their
hospital in the preferred list. A list of preferred hospitals must be added to
the policy.

Case 2: Employee bears the cost of premium
fully or partially

In a scenario where the employer does not
want to bear the cost of premium fully or partially, it can act as a
facilitating vehicle.

•
Run effective campaign to enroll:
Company as an employer must run a campaign to encourage most of its employees
if not all, to enroll for group insurance with parental insurance. The campaign
must be driven to inform the benefits of such enrolment and how the company is
supporting by choosing the best broker, including appropriate clauses and
dealing with the best insurance provider. Such a campaign if lead by the CEO or
HR head will have a more positive impact on the employees. Certain insurance
brokers also create and run a campaign for their clients.

•
Ensure portability of policy:
Employer while negotiating with insurance provider must ensure that the
employee who is paying the premium must be allowed to carry forward the policy
when he is moving to another company. This facility of carrying forward is
called portability of policy.

Case 3: When neither case 1 or case 2 is
possible:

• Facilitate senior
citizen health insurance:

In case an employer chooses not to spend
any amount on medical expenses of employee’s parents, it can at least encourage
its employees to take senior citizen health insurance policy for their parents.
An employer on behalf of its employees seeks quotes for such policy and with
the help of its insurance broker, support its employees to get the best
insurance plan.

Employers who can’t afford to support
financially at least can support their employees by arranging a facility to
take the right decision. If the parent’s health is taken care of, employee’s
half the diversion is taken care off.

There are various plans and benefits
offered by many insurers. Some of the plans are specially designed for people
suffering from ailments like high blood pressure, diabetes, obesity etc.,

The main challenge is that individual
Health insurance is only for healthy people. One must declare family history
and current health conditions while taking the policy. The insurer then decides
to cover or reject the proposal. Even if they decide to cover the existing
ailments, it gets covered after a certain waiting period. This makes tough for
senior citizens to get the appropriate health cover.

Senior citizen health insurance policy is designed to serve
the health needs of senior people who have crossed 60 yrs. of age. These policies cover hospital charges and medical expenses
incurred due to sickness or injury due to an accident. Moreover, in senior
citizen health policies, the waiting period set for pre-existing diseases is
also lower than the regular individual health policies. Certain Banks also
offers Group Mediclaim policies for its customers and the premium are
relatively lesser than the normal retail policies. Employers can tie up with
banks and offer those policies to the employees. Moreover, employees can claim
additional tax deductions under section 80D for the premium paid for the health
policy taken for parents also.

So now that you know how to cover parents, hope this might
help you choose the best approach! In case you need any more clarity and you
have any question that needs to be answered, feel free to reach us at
Ethika.in!